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Insurers’ long-term care plans take a stand – against women

Wed Dec 5th, 2012 on     Insurance Claims,    

The long-term care insurance market is about to change, especially for women. After years of charging the same premiums regardless of the insured’s gender, one of the country’s leading LTC insurers announced that women’s premiums will be increasing by as much as 40 percent in 2013.

Research has shown that 2 out of every 3 long-term care insurance dollars are spent on women, and the industry had apparently not anticipated that this would happen. Women cost more because they live longer and, unfortunately, tend to outlive their husband/caregivers. The result is longer care facility stays and higher insurance payouts.

Demographics are not the only reason for the change in strategy, though. Just a few years ago, insurance companies saw long-term care coverage as an opportunity for long-term profits. With Baby Boomers entering retirement and retirement savings devalued during the recession, insurers predicted that the coverage would gain in popularity and that premiums would easily outpace payouts. To make their own products more attractive to consumers, they offered underwriting discounts.

What the industry apparently failed to take into account was that the recession would cut into companies’ investment income by keeping interest rates low. It’s possible, too, that insurers did not accurately predict increases in the costs of health care — particularly continuing care. In the end, many companies have gotten out of the long-term care insurance business.

Along with higher premiums — for new and existing policies — consumers can expect tighter underwriting standards. What those could look like will be the topic of our next post.

Source: Wall Street Journal, “Women Face Higher Costs,” Kelly Greene, Nov. 23, 2012

Our firm helps clients with coverage disputes on insurance policies, including the long-term care coverage discussed in this post. If you are interested in learning more about our Miami, Florida, insurance law practice, please visit our website.

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